The Needless Costs of Bureaucracy

Piles of files

If you are looking for a “poster child” of government waste and inefficiency, one need not look further that Boyers, Pennsylvania.

There, in an old limestone mine – 230 feet below the surface – staff from the Office of Personnel Management (OPM) toil each day, processing the retirement requests for the federal workforce; on average about 100,000 packages per year.

While the location for OPM’s work is unusual, that alone does not explain the significance of this particular operation.

All of the claims are processed by hand.

That’s right, the federal government’s entire retirement system is a massive paperwork activity, more reminiscent of the War Department during WWII than of a 21st century organization.

OPM employs 600 people who work the claims each day, walking back and forth to 28,000 file cabinets that hold all the records. Taken by itself, this might not seem like much more than a freakish anomaly, but the Boyers operation is symptomatic of the unnecessary excesses of government bureaucracy and the costs it imposes.

OPM’s spends $55 million on the paper-driven retirement process each year. And it’s getting more expensive. The cost per claim has increased from $82 to $108 over the past five years.

The cost in terms of delay for this manual process is also significant. It takes an average of 61 days for OPM to issue a benefit check after initial receipt of the retirement package. If you are a federal retiree, you need to plan ahead for two months or more without income.

This is simply unacceptable.  At the state level, where technology automation has been readily adopted, benefits processing is far more rapid.  In Florida, the average claim takes 47 days.  In Texas, it is only two days.

But automation at the OPM site has been at the heart of the problem. The OPM facility is resistant to the very change that would make the operation more efficient, accountable and transparent. Over a period of years, OPM has made failed technology investments at the Boyers facility topping $100 million. Sadly this is not an uncommon problem in the government, where the bureaucratic IT culture survives, despite the market alternative of performance engineering.

OPM’s response to its technology failure was to hire more bodies and rearrange the paperwork process so that it moved more quickly. While this may meet immediate processing goals, it is no model for a long-term solution; doubling down on inefficiency.

We are living in an age of breathtaking technological achievement and innovation. Computing power, advanced analytics and storage capacity increase by orders of magnitude, as the costs for these technologies drop geometrically. Enormous organizational power, delivered through a diverse set of flexible, Commercial Off the Shelf (COTS) products, is now available to commercial customers and regular consumers.  There is no adequate reason why the government does not availed itself of a timely opportunity to achieve economies of scale, improve performance, efficiency, accountability and transparency with these tools. When combined with a discipline that is specifically designed to address the challenges of bureaucracy and the risks in technology deployment – such as Aplin’s PASS performance engineering – real  change and innovation is possible.

OPM’s retirement processing would be a good place to start.

By | April 30, 2014 | | 0 Comments

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